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Excise tax news

1 April 2017, the amendments
to the Law "On Excise Tax" were adopted establishing procedures for
the movement of natural gas and excise duties for the calculation of the open
natural gas market conditions and a number of other refinements and additions.

It is foreseen that natural
gas supplied to the taxable end users corresponding to the Combined
Nomenclature codes 2711 11 00 and 2711 21 00 are a subject to an excise tax, except in cases defined
by the law. If natural gas is used as fuel, the tax rate is 1.65 euros per 1
megawatt-hour taking into account the gross calorific value of natural gas
while using as a fuel - 9.64 EUR per 1 megawatt-hour. The tax rate is 0.55 EUR
per megawatt hour if natural gas is used as fuel for industrial production and
agricultural raw materials at pre-treatment processes.

Natural gas is not
subject to tax which is used by the end-user for other purposes than motor fuel
or heating fuel for dual use in accordance with the conditions referred in the Law
or used by mineralogical processes. As well, the natural gas exempt from tax
which is used in agriculture (greenhouse heating, industrial buildings and
poultry incubator heating) by the end-user.

The law stipulates
that operations related to natural gas, including liquefied and compressed natural
gas, if it is not transported through pipeline require authorized warehouse
license. If the natural gas is sold as a fuel, the merchant should have a retail
license.

New Regulation by the Cabinet of Ministers

There are new Regulation
by the Cabinet of Ministers on the movement of natural gas and excise duty
arrangements which will also set procedures for the licensing of natural gas retail and authorised
warehouse status for operations with natural gas. According to the draft, a
special permit (license) for natural gas as a fuel retail will be required also
in cases when natural gas retailer obtains natural gas at retail site through pipeline.

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